New Records For U.S. Indices In Sight, Cautious Markets Rise On Trade Hope, Retail Sales Are Hot

Global markets rise on trade hopes but new records for the indices and a trade deal may be elusive.
Thomas Hughes

The U.S. Markets Are Up In Early Trading

The U.S. indices are slightly higher in cautious Friday morning trading. The NASDAQ Composite and S&P 500 are tied for the lead with gains near 0.30%. The Dow Jones Industrial Average is up about 0.15%. The move is driven by rising hopes a thaw in U.S./Chinese trade relations will hold. Today’s news includes word from President Trump that he might accept an interim deal if one were to present itself. Despite the gesture of goodwill issued on Thursday, some analysts speculate the current thaw is an indication the two sides are preparing for a much longer conflict.

Blue-chip bellwethers Boeing and Caterpillar are both moving higher in early trading. Shares of chipmakers are in the lead with an average gain of 1.0%. In economic news, U.S. retail sales rose 0.4% over the last month despite concern for weakness. Some analysts speculated strength in Amazon’s Prime Day may have sapped strength from August sales. The consensus was a gain of 0.20%. This is the last major data before next week’s FOMC meeting. The FOMC is expected to cut rates but once again the data does not support that idea.

EU Markets Cautiously Higher After Aggressive ECB Stimulus

The EU markets are mostly higher on Friday but the gains are not evenly spread. The German DAX is in the lead with an advance of 0.60% while the CAC trails at 0.37% and the FTSE lags at 0.05%. Yesterday’s easing from the ECB was seen as more-aggressive than expected and has led some to question the bank’s ability to follow through. The problem is the bank’s claim it could purchase government bonds for an indefinite period of time. Most agree the bank will run out of available bonds at some time in the not-too-distant future.

Financials are among today’s leader despite the ECB’s rate cut. The ECB prime rate is now -0.50% which makes it even harder for the financials to make money. Shares of bank stocks were particularly strong rising an average of 4.0%. Food & Beverage stocks fell nearly -2.0%. In economic news, the EU’s trade surplus with the U.S. rose to its highest level on record. The ongoing trade war with China has U.S. business more dependent than ever on their EU counterparts.

Asian Markets Rise On Trade Hopes

Asian markets moved broadly higher on rising trade hopes. The Nikkei led the advance with a gain of 1.05% with notable strength in Fast Retailing and Softbank. Fast Retailing rose 0.6% while Softbank gained more than 3.0%. The Hang Seng and Shanghai rose 0.98% and 0.75% while Korea gained 0.85% and Australia only 0.21%.

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